The Federal Trade Commission (FTC) has begun the process of reviewing a potential change to federal regulations about the use of restrictive covenants in employment contracts. The goal of these changes is, ostensibly, to allow employees a greater degree of freedom to change employment without fear of legal retribution. Employers, however, are wary of these potential changes, which they say may make it easier for employees to personally benefit from trade secrets or other confidential information. Continue reading “FTC Begins Review of Rule on Restrictive Covenants”
Restrictive covenants are provisions in employment agreements that prohibit a person from working for a competitor after leaving his or her employer. The effect of such clauses varies greatly. In addition from limiting a former employee’s job opportunities, a restrictive covenant allows an employer to restrict the former employee from starting a business or forming a venture with others that competes against the former employer; contacting or soliciting former or current customers or employees of the former employer; and using confidential knowledge, trade secrets and other privileged information learned while working for the former employer. Many employers also place time and geographical restrictions in these covenants.